unilever pakistan foods limited ms. shazia syed executive director & chief executive ms. farheen...

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COMPANY INFORMATION

UNILEVER PAKISTAN FOODS LIMITED

BOARD OF DIRECTORS

Mr. Kamran Y. Mirza Independent Director

& Chairman of the Board

Ms. Shazia Syed Executive Director & Chief Executive

Ms. Farheen Salman Amir Executive Director

Mr. Zulfikar Monnoo Non-Executive Director

Mr. Muhammad Adil Monnoo Non-Executive Director

Mr. Kamal Monnoo Non-Executive Director

Mr. Badaruddin F. Vellani Non-Executive Director

Mr. Khalid Mansoor Independent Director

Mr. Ali Tariq Non-Executive Director

Company Secretary & Acting Chief Financial Officer

Mr. Aman Ghanchi

Audit Committee

Mr. Khalid Mansoor Chairman & Member

Mr. Zulfikar Monnoo Member

Mr. Muhammad Adil Monnoo Member

Mr. Badaruddin F. Vellani Member

Mr. Kamran Y. Mirza Member

Mr. Moiz Idris Rajput Secretary & Head of Internal Audit

Human Resource & Remuneration Committee

Mr. Kamran Y. Mirza Chairman & Member

Mr. Zulfikar Monnoo Member

Mr. Kamal Monnoo Member

Ms. Shazia Syed Member

Ms. Kanize Fathema Zuberi Secretary & Head of HR

Auditors

Messrs KPMG Taseer Hadi & Co.

Chartered Accountants

Sheikh Sultan Trust Building No. 2

Beaumont Road, Karachi - 75530

Pakistan

Registered Office

Avari Plaza

Fatima Jinnah Road

Karachi - 75530

Share Registration Office

Share Registrar Department.

Central Depository Company of Pakistan Limited,

CDC House. 99-B. Block “B” S.M.C.H.S.

Main Shahra-e-Faisal Karachi - 74400

Website Address

www.unilever.pk

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Directors’ Review

The directors are pleased to present the financial information for the six months ended June 30, 2019.

Sales grew by 4.8% on the back of strong brand equity, successful innovations and sustained investment in advertisement and promotion. Gross Margin declined by 4.4% to 42.0% due to difficult operating environment. Earnings per share (EPS) increased by 7.9% versus the same period last year.

* EPS for prior period is restated

Future Outlook

Despite challenging economic and operating environment which is expected to continue in short-term, the business will continue to deliver positive results. We are committed to deal with the challenges that lie ahead with our access to global expertise, superior consumer understanding, powerful innovations and world class customer service. We believe that our dedicated and focused efforts will allows us to provide better value to meet consumers’ everyday needs and deliver sustained profitable growth for the benefit of all stakeholders.

Thanking you all.

On behalf of the Board

Shazia Syed Kamran Y. MirzaChief Executive Officer Chairman

KarachiAugust 27, 2019

Financial Highlights

Six months

ended June 30,

2019 2018 Increase

%(Restated)

Rs ‘000

Net Sales

Profit before Taxation

Profit after Taxation

Earnings per Share* (Rs.)

6,535,224

1,382,159

953,134

149.63

6,234,169

1,254,850

865,783

138.64

4.8%

10.1%

10.1%

7.9%

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Unilever Pakistan Foods Limited

Report on review of Interim Financial Statements

Introduction

We have reviewed the accompanying condensed interim statement of financial position of Unilever Pakistan Foods Limited as at June 30, 2019 and the related condensed interim statement of profit or loss and other comprehensive income, condensed interim statement of changes in equity, and condensed interim statement of cash flows, and notes to the financial statements for the six-month period then ended (here-in-after referred to as the “interim financial statements”). Management is responsible for the preparation and presentation of this interim financial statements in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements is not prepared, in all material respects, in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting.

Other matter

The figures for the quarter ended 30 June 2019 and 30 June 2018 in the interim financial statements have not been reviewed and we do not express a conclusion on them.

The engagement partner on the audit resulting in this independent auditor’s report is Moneeza Usman Butt.

Date: August 27, 2019 KPMG Taseer Hadi & Co. Chartered Accountants

Karachi

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CONDENSED INTERIM STATEMENT OF FINANCIAL POSITIONAS AT JUNE 30, 2019

Note

ASSETS

Non-current assetsProperty, plant and equipment 4Right-of-use assetsIntangible assetsLong term prepayment

Long term loans and advances

Current assets

Stores and sparesStock in tradeTrade debtsLoans and advancesTrade deposits and short term prepaymentsOther receivablesTaxation - netSales tax refundableCash and bank balances

Total assets

EQUITY AND LIABILITIES

Share capital and reservesShare capitalReserves

LIABILITIES

Non-current liabilities

Staff retirement benefitsDeferred taxationLease liabilities

Current liabilities

Trade and other payables 7Unpaid dividendUnclaimed dividendProvisions 5Accrued interest / mark-upShort term borrowingsCurrent portion of lease liabilities

Total liabilities

Total equity and liabilities

UnauditedJune 30,

2019

3,379,46022,84481,6372,980

10,794

3,497,715

68,304939,225962,00712,86029,95856,79072,355

230,1511,585,4383,957,088

7,454,803

63,6991,731,458

1,795,157

16,854189,020

1,195207,069

3,699,07064,92420,10857,21121,901

1,561,04728,316

5,452,577

5,659,646

7,454,803

Contingency and commitments 8

AuditedDecember 31,

2018 (Restated)

2,783,54934,85381,6372,980

11,338

2,914,357

49,055963,034509,28813,10733,99647,136

263,86962,225

1,114,8163,056,526

5,970,883

63,6991,822,990

1,886,689

14,000141,59024,819

180,409

2,835,39021,31010,87753,53613,391

938,99430,287

3,903,785

4,084,194

5,970,883

-

The annexed notes 1 to 13 form an integral part of these condensed interim financial statements.

DirectorFarheen Salman Amir

Chief Financial Officer (Acting)Aman Ghanchi

Chief ExecutiveShazia Syed

(Rupees in thousand)

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CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED JUNE 30, 2019 (UNAUDITED)


Note June 30,

2019

June 30,

2018 -

restated

June 30,

2019

June 30,

2018 -

restated

Sales - net 10 3,217,708 3,006,563 6,535,224 6,234,169

Cost of sales (1,942,833) (1,650,125) (3,789,949) (3,341,897)

Gross profit 1,274,875 1,356,438 2,745,275 2,892,272

Distribution cost (705,098) (854,551) (1,269,844) (1,479,213)

Administrative expenses (89,051) (53,527) (182,444) (151,839)

Other operating expenses (33,511) (22,610) (79,352) (92,518)

Other income 214,750 77,581 256,793 120,497

661,965 503,331 1,470,428 1,289,199

Finance cost (44,835) (16,000) (88,269) (34,349)

Profit before taxation 617,130 487,331 1,382,159 1,254,850

Taxation

- current (178,838) (226,948) (381,595) (426,011)

- deferred (42,539) 25,048 (47,430) 36,944

(221,377) (201,900) (429,025) (389,067)

Profit after taxation 395,753 285,431 953,134 865,783

Other comprehensive income - - - -

Total comprehensive income 395,753 285,431 953,134 865,783

Basic and diluted earnings per share 62.13 45.40* 149.63 138.64*

* EPS for prior period is restated.


Half year ended

---------------------------- (Rupees in thousand) ----------------------------

------------------------------------ (Rupees) ------------------------------------

Quarter ended




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CONDENSED INTERIM STATEMENT OF CASH FLOWS


FOR THE HALF YEAR ENDED JUNE 30, 2019 (UNAUDITED)

Note June 30, June 30,2019 2018

(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 1,382,159 1,254,850Adjustment for:

Depreciation 87,442 83,712Depreciation on right-of-use asset 12,009 11,977Gain on disposal of property, plant and equipment - (460)Reversal of provision for impairment of fixed assets - (361)Finance cost 82,562 25,961Provision for staff retirement benefits 3,458 2,243Return on savings accounts (568) (1,526)

184,903 121,5461,567,062 1,376,396

Effect on cash flow due to working capital changesDecrease / (increase) in current assets

Stores and spares (19,249) (5,803)Stock in trade 23,809 91,899Trade debts (452,719) (293,071)Loans and advances 247 2,276Trade deposits and short term prepayments 4,038 (10,952)Sales tax refundable (167,926) -Other receivables (9,654) (9,607)

(621,454) (225,258)Increase / (decrease) in current liabilities

Trade and other payables 863,681 117,854Provisions 3,675 (11,364)Sales tax payable - (4,930)

867,356 101,560

Cash generated from operations 1,812,964 1,252,698Mark-up paid (71,812) (22,131)Income tax paid (190,081) (371,527)Increase in long term loans and advances 544 (3,313)Staff retirement benefits - contributions paid (604) -

Net cash generated from operating activities 1,551,011 855,727

CASH FLOWS USED IN INVESTING ACTIVITIES

Purchase of property, plant and equipment (683,353) (51,512)Proceeds from disposal of property, plant and equipment - 460Return received on savings accounts 568 1,526

Net cash used in investing activities (682,785) (49,526)

CASH FLOWS (USED IN) / FROM FINANCING ACTIVITIES

Lease liability payments (27,835) (26,145)Proceeds from issue of right shares - 1,273,992Dividend paid* (991,822) (746,920)

Net cash (used in) / generated from financing activities (1,019,657) 500,927

Net (decrease) / increase in cash and cash equivalents (151,431) 1,307,128Cash and cash equivalents at beginning of the period 175,822 (236,183)

Cash and cash equivalents at end of the period 6 24,391 1,070,945

* This includes dividend paid to Holding Company during the period amounting to Rs. 771 million

(June 30, 2018: Rs. 645 million).






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CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY


FOR THE HALF YEAR ENDED JUNE 30, 2019 (UNAUDITED)

Share Total

Capital

Issued,

subscribed

and paid-up

capital

Share

premium

Special General

Balance as at January 1, 2019

Effect of initial application of standard - Note 9

Balance as at January 1, 2019 - Restated

Transactions with owners of the Company - Distribution

Final dividend for the year ended

December 31, 2018 @ Rs. 76 per share

First Interim dividend for the year ending

December 31, 2019 @ Rs. 88 per share

Total comprehensive income for the period

Profit for the half year ended

June 30, 2019

Balance as at June 30, 2019

Balance as at January 1, 2018

Effect of initial application of standard - Note 9

Balance as at January 1, 2018 - Restated

Transactions with owners of the Company - Distribution

First Interim dividend for the year ended December 31,

2018 @ Rs. 105 per share

Transactions with owners of the Company - Contribution

Issue of right shares

Total comprehensive income for the period

Profit for the half year ended June 30, 2018 - Restated

Balance as at June 30, 2018 - Restated

63,699

-

63,699

-

-

-

63,699

61,576

-

61,576

-

2,123

-

63,699

1,296,499

-

1,296,499

-

-

-

1,296,499

24,630

-

24,630

-

1,271,869

-

1,296,499

628

-

628

-

-

-

628

628

-

628

-

-

-

628

138

-

138

-

-

-

138

138

-

138

-

-

-

138

548,920

(23,195)

525,725

(484,113)

(560,553)

953,134

434,193

94,498

(27,354)

67,144

(646,550)

-

865,783

286,377

1,846,185

(23,195)

1,822,990

(484,113)

(560,553)

953,134

1,731,458

119,894

(27,354)

92,540

(646,550)

1,271,869

865,783

1,583,642

1,909,884

(23,195)

1,886,689

(484,113)

(560,553)

953,134

1,795,157

181,470

(27,354)

154,116

(646,550)

1,273,992

865,783

1,647,341

----------------------------------------------- (Rupees in thousand) -----------------------------------------------


Sub Total

Reserve

Capital Revenue

Unappropriated

profit




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1. BASIS OF PREPARATION

These condensed interim financial statements of Unilever Pakistan Foods Limited ("the

Company") for the half year ended June 30, 2019 have been prepared in accordance

with the accounting and reporting standards as applicable in Pakistan for interim

financial reporting. The accounting and reporting standards as applicable in Pakistan

for interim financial reporting comprise of International Accounting Standard (IAS) 34,

Interim Financial Reporting, issued by the International Accounting Standards Board

(IASB) as notified under the Companies Act, 2017; and provisions of and directives

issued under the Companies Act, 2017. Where the provisions of and directives issued

under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of

and directives issued under the Companies Act, 2017 have been followed.

These financial statements have been prepared under the historical cost convention

except as disclosed elsewhere.

These condensed interim financial statements are presented in Pakistani Rupees which

is the functional currency of the Company and figures are rounded off to the nearest

thousand of Rupees.

2. ACCOUNTING POLICIES

Except as described below, the accounting policies and the methods of computation

adopted in the preparation of these condensed interim financial statements are the same

as those applied in the preparation of the financial statements for the year ended

December 31, 2018.

On January 1, 2019 the Company adopted IFRS 16 ‘Leases’ which replaces existing

leasing guidance, including IAS 17 ‘Leases’, IFRIC 4 ‘Determining whether an

Arrangement contains a Lease’, SIC-15 ‘Operating Leases- Incentives’ and SIC-27

‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. IFRS 16

introduces a single, on-balance sheet lease accounting model for lessees. A lessee

recognizes a right-of-use asset representing its right to use the underlying asset and a

lease liability representing its obligation to make lease payments. There are recognition

exemptions for short-term leases and leases of low-value items. Previously, the Company

classified leases based on its assessments of whether the lease transferred substantially

all of the risks and rewards of ownership. Full retrospective approach in accordance with

IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' has been used

for the initial application of IFRS 16 and presented in note 9 to these condensed interim

financial statements.

At inception, the Company assesses whether a contract is or contains a lease. This

assessment involves the exercise of judgement about whether the Company obtains

substantially all the economic benefits from the use of the asset and whether the

Company has a right to direct the use of the asset.

The entity recognizes a right-of-use asset and lease liability at the commencement of the

lease. The right-of-use asset is initially measured based on the present value of lease

payments, plus initial direct costs, less any incentives received. The right-of-use asset is

depreciated over the shorter of the lease term or the useful life of the underlying asset.

The right-of-use asset is subject to testing for impairment.

The lease liability is initially measured at the present value of the lease payments that are

not paid at the commencement date, discounted using the Company's borrowing rate.

NOTES TO AND FORMING PART OF THE CONDENSED


INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED JUNE 30, 2019 (UNAUDITED)

9

The lease liability is subsequently increased by the interest cost on the lease liability and

decreased by lease payments made.

3 ACCOUNTING ESTIMATES, JUDGEMENTS AND FINANCIAL RISK MANAGEMENT

The preparation of these condensed interim financial statements in conformity with

approved accounting standards requires management to make estimates, assumptions

and use judgements that affect the application of policies and reported amounts of assets

and liabilities, income and expenses. Estimates, assumptions and judgements are

continually evaluated and are based on historical experience and other factors, including

reasonable expectations of future events. Revisions to accounting estimates are

recognised prospectively commencing from the period of revision.

Judgements and estimates made by the management in the preparation of these

condensed interim financial statements are the same as those that were applied to

financial statements as at and for the year ended December 31, 2018 except for those

related to IFRS 16 as explained in note 2.

The Company’s financial risk management objectives and policies are consistent with

those disclosed in the financial statements as at and for the year ended December 31,

2018.

4. PROPERTY, PLANT AND EQUIPMENT Unaudited Audited

June 30, December 31,

2019 2018

Operating assets - at net book value 1,941,558 1,728,165

Capital work in progress - at cost 1,437,902 1,055,384

3,379,460 2,783,549

4.1 Additions of operating fixed assets during the period are as follows:

June 30, June 30,

2019 2018

Building on freehold land 72,854 8,357

Plant and machinery 217,874 23,574

Electrical, mechanical and office equipment 1,841 -

Furniture and fixtures 8,266 -

300,835 31,931

5. PROVISIONS Unaudited Audited

June 30, December 31,

2019 2018

Sindh Infrastructure Cess 5.1 44,359 40,684

Restructuring 12,852 12,852

57,211 53,536

5.1 The change represents provision made during the period.

Additions (at cost)

Unaudited




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6. CASH AND CASH EQUIVALENTS

June 30,

2019

June 30,

2018

Cash and bank balances 1,585,438 1,329,998

Short term borrowings (1,561,047) (259,053)

24,391 1,070,945

9. IFRS 16 - RESTATEMENT

2019 2018 2017

Unappropriated profit as At January, 1 548,920 94,498 1,717,946

Cumulative adjustment of initial application of IFRS 16 (23,195) (27,354) (28,120)

525,725 67,144 1,689,826

June 30,

2018

Effect of

initial

application of

IFRS 16

June 30,

2018

(Restated)

Cost of sales 3,347,010 (5,113) 3,341,897

Finance cost 30,873 3,476 34,349

3,377,883 (1,637) 3,376,246

Unaudited

Statement of Profit or Loss and Other

Comprehensive Income

7. TRADE AND OTHER PAYABLES

This includes Rs. 49.6 million (December 31, 2018: Rs. 23.3 million) with respect to

contract liabilities.

8. CONTINGENCY AND COMMITMENTS

8.1 Contingency

There were no contingencies as on June 30, 2019.

8.2 Commitments

The commitments for capital expenditure outstanding as at June 30, 2019 amounted to

Rs. 289.2 million (December 31, 2018: Rs. 653.1 million).

9.1 Effects of item wise restatement upon initial application of IFRS 16, other than those

which have been disclosed elsewhere, are as follows:




11

June 30,

2019

June 30,

2018

10. SALES - net

The Company analyses its net revenue by the following product groups:

Products used by end consumers 5,483,471 5,201,649

Products used by entities 1,051,753 1,032,520

6,535,224 6,234,169

Unaudited

11. RELATED PARTY TRANSACTIONS

Related party transactions during the period other than those disclosed elsewhere in

these financial statements are as follows:

Relationship with Nature of transactions Unaudited Unaudited

i) Holding company Royalty 840 123,856

ii) Other related parties Technology fee and royalty 258,828 133,876

Purchase of goods 1,043,226 893,255

Sale of goods 22,620 21,499

Fee for receiving of servicesfrom related parties 401,777 314,111

Fee for providing of servicesto related parties 36,546 34,279

Contribution to:- Defined Contribution plan 7,721 10,037

Settlement on behalf of:- Defined Contribution plan 9,144 16,680

iii) Key management Salaries and other short-termemployee benefits 14,311 9,952personnel

the company June 30, 2018

June 30,2019

Aggregate amount charged for fee to seven (June 30, 2018: seven) non-executive directors during the period amounting to Rs. 2.1 million (June 30, 2018: Rs. 2.1 million).

12. INTERIM DIVIDEND

The Board of Directors in its meeting held on August 27, 2019 declared a second interim cash dividend for the year ending December 31, 2019 of Rs. 63.00 per share (second interim dividend for the year ended December 31, 2018: Rs. 44.00 per share) amounting to Rs. 401.32 million (second interim dividend for the year ended December 31, 2018: Rs. 280.28 million).

13. DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue on August 27, 2019 by the Board of Directors of the Company.






12

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٣٠ �ن � � �ہ ��

4.8%

10.1%

10.1%

7.9%

6,234,169

1,254,850

865,783

138.64

6,535,224

1,382,159

953,134

149.63

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Restated

unilever pakistan foods limited ms. shazia syed executive director & chief executive ms. farheen...

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